"WATERLOO, ONTARIO -- (MARKET WIRE) -- 02/11/09 -- Research In Motion Limited (RIM) (NASDAQ:RIMM)(TSX: RIM) today provided an update on forecasted net subscriber account additions for the fiscal fourth quarter ending February 28, 2009.
RIM now expects net subscriber account additions for Q4 to be over 20% higher than the 2.9 million net subscriber account additions forecasted by RIM on December 18, 2008. RIM had record levels of net subscriber account additions throughout the month of December and continued to see strong levels following the holiday buying season. The new BlackBerry® products that were launched in the fiscal third quarter continue to be well received in the market and post-holiday subscriber performance in both North America and international markets has exceeded RIM's earlier expectations. RIM expects net subscriber account additions in Q1 to reflect a more normalized average weekly run-rate as the first quarter will not include the type of holiday surge experienced in Q4.
"RIM achieved a very strong start to the holiday buying season and the momentum carried on stronger than expected during the past seven weeks despite a seasonally slower timeframe and the challenging economic environment," said Jim Balsillie, Co-CEO at
RIM. "We are pleased with our leadership and momentum in the market after shipping our 50 millionth BlackBerry smartphone in January and introducing a range of new products that are achieving exceptional early results and helping attract record levels of new customers to the BlackBerry platform." In addition, RIM is reaffirming its financial guidance for the fourth quarter and expects revenue for the quarter to be at or near the mid-point of the previously guided range. Gross margin and earnings per share for the quarter are expected to be at the low end of the previously guided ranges. A variety of factors, including product mix, lowered channel inventory levels and an increased ratio of new subscriber sales to upgrade and replacement sales, are contributing to the degree of outperformance in subscriber growth relative to revenue and earnings performance within the quarter.
RIM expects to report actual Q4 net subscriber account additions and actual Q4 financial results, as well as provide guidance for the first quarter of fiscal 2010, on April 2, 2009.
The number of net subscriber account additions is a non-financial metric and is intended to highlight the change in RIM's subscriber base. The number of net subscriber account additions should not be relied upon as an indicator of RIM's financial performance. The number of net subscriber account additions does not have any standardized meaning prescribed by U.S. GAAP and may not be comparable to similar metrics presented by other companies."
The headline here notes the additional subscriber growth. In the 2nd paragraph, there as a good quote from the CEO and the concept of added momentum was duly noted. Then there were these two sentences in the 3rd paragraph: “Gross margin and earnings per share for the quarter are expected to be at the low end of the previously guided ranges. A variety of factors, including product mix, lowered channel inventory levels and an increased ratio of new subscriber sales to upgrade and replacement sales, are contributing to the degree of outperformance in subscriber growth relative to revenue and earnings performance within the quarter.” After all of the optimism was a very subtle but notable warning that earnings were going to come in lower than expected…followed by a note about subscriber growth outpacing earnings! Amazing. Now, I could easily turn this into a schpiel as to why RIMM’s PR entity makes them seem very squishy. However, I have but one point for day traders: whenever any company puts out a press release discussing parameters of growth or shrinkage of any kind (in this subscriber growth), read through the whole thing. Companies want to focus upon the positive obvious, but one must be diligent about reading the entire text of press releases that companies put out to get the whole (e.g. true) story.
Markets slumped throughout the world overnight. Tokyo finished down 3% with Hong Kong and Taiwan down 2% or so. European bourses have followed suit with the indeces down 1% to 2% following reports in various major newspapers there that the banking crisis there is deeper than initially thought. State-side, futures are down as well. Look for a day similar to yesterday- rumor and politically driven…and very choppy at that. The bias off-hand seems to be to the downside, but as has been so often the case recently, watch the major banks and you’ll have an idea of the direction of the broader market.
Watch list:
Reiterating-
Please understand that if the ideas do not get to the hoped for set-ups cited below, more often than not, one should not blindly trade the symbol next to said idea.
If the whole story is not there -
If something is good, assume either a short thru unchanged or an A-B-A2 based on direction of the market unless specifiedIf something is bad, assume either a buy thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified-
Good- The following stocks have good news and/or a strong technical pattern
XL- closed near a high after posting great earnings Tuesday afternoon
DVA- closed near a high
NFP- closed near a high
CMG- solid earnings
BWLD- handily thrashed earnings estimates
AIPC- another restaurant company with good earnings
WINN- beat earnings
WFC, PNC- among bank stocks closing near their highs
AU, NEM, AEM gold stocks notably strong yesterday; all of these closed near their highs
SIGA- closed near a high
MJN, FCX, STJ, VFC- all on “Mad Money” last night
ALXN- good earnings
KO- good earnings
Bad-The following stocks have bad news and/or a weak technical pattern
FBP- closed near a low
ID- closed near a low; a break of Wed 6.06 low could be a notable short
NTAP- poor earnings
MAS- bad earnings and restructuring
STR- terrible earnings
ATVI- warned on next quarter
LVS- poor earnings
SQNM- missed earnings estimates
GIL- suspending earnings guidance due to uncertainty about its business
JASO- warned again
TEX- terrible earnings
LYV, TKTM- both closed near their lows as concerns over their planned merger grow
HIG- president of company resigned; may be viewed as positive as rumors may circulate that the company becomes a takeover target now
MAR- warned on outlook
EDU- poor earnings
LJPC- halting its phase III trial of its lead drug
Earnings:
THURS FEB 12 BEFORE
AET ALXN BWA
CLI ECL FCL
IRC JAH KO
LH LIFE LUFK
MAR MFC MLM
NRG NXY PCH
PDS PGN PTEN
RTP SCG TDC
VIA/B VTR WMI
THURS FEB 12 AFTER
CAKE CEPH COG
DCT ECA ENH
EQ GDI MFE
PNRA SHO THRX
VCLK VR
Good luck today.
www.epiphanytrading.com
Erik R. Kolodny- Chief Markets Strategist of Epiphany Trading, LLC
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